Zeek Rewards claims process submitted

Friday

Mar 29, 2013 at 5:52 PM

Nearly 1 million victims who lost money through the alleged Ponzi scheme Zeek Rewards are one step closer to submitting their claim.

BY NASH DUNNThe Dispatch

Nearly 1 million victims who lost money through the alleged Ponzi scheme Zeek Rewards are one step closer to submitting their claim.The court-appointed receiver overseeing the case, Charlotte attorney Kenneth Bell, filed a motion on Friday seeking approval of a claims process to compensate what could be about 840,000 "net losers."When the claims process is approved by the Courts, victims will be notified by email, U.S. Mail, multi-level marketing websites and various newspapers, including The Dispatch, according to the filing.Victims will have 120 days from the time the order approving the process is entered to submit their claim, according to the filing."Any claim submitted after the bar date is disallowed," according to the filing.Hundreds of thousands of Zeek Rewards affiliates have eagerly awaited the claims process since the federal government shut down the Lexington-based operation on Aug. 17, 2012.The U.S. Securities and Exchange Commission filed securities fraud charges and froze Zeek's assets, accusing the program, its parent company Rex Venture Group and its chief executive officer Paul Burks of raising more than $600 million through the offer and sale of unregistered securities.Bell said all claims will be submitted electronically using a claims portal on the receivership website, www.zeekrewardsreceivership.com. No other claims method will be used without written permission of the receiver, according to the filing.The claims portal will be active within 14 days of the Courts signing off on the claims process, according to the filing.In the claims portal, victims will be able to provide proof of their claim, specify the type of claim and attach supporting documents, among other things.Once all are submitted, the receivership team will make a claim determination, which will reflect the aggregate amounts invested in, and received from, the operation, according to the filing."A determination of the amount of a claim at this stage in the process—even in the instance where the receiver does not dispute the amount claimed by a Claimant—does not mean that the Claimant will receive a distribution equal to 100 percent of the amount of their determined claim," Bell said in the motion. The actual distribution percentage will be established in the future, Bell said, and will be based on total assets available for distribution, divided by the aggregate total of allowed claims asserted, according to the filing.Most of the distribution percentage is based on how much money can be clawed back from affiliates who made money from Zeek Rewards.Bell is targeting about 80,000 Zeek Rewards users who profited from the program. He estimates that about $295.5 million could have been "fraudulently transferred" to the program's "net winners," who are subject to "claw back" litigation. Zeek Rewards attracted close to 2.2 million users throughout the world in less than three years.Affiliates bought into the program by purchasing one of three monthly subscription plans for $10, $50 or $99. That subscription provided them a "back office" and enabled them to purchase up to $10,000 in bids for the penny auction site, Zeekler.com, which was also administered by Rex Venture Group.To earn a profit, affiliates were required to give their bids to new customers and post a daily advertisement for the site online. For purchasing a subscription, buying bids, giving them away and placing an ad, affiliates got to share in the daily profits from Zeekler.com through rewards called "profit points" — bonuses they could compile over time and eventually turn into cash.In his motion on Friday, Bell said "profit points" cannot serve as a basis for any claim.Nash Dunn can be reached at 249-3981, ext. 227, or at nash.dunn@the-dispatch.com.